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Subprime Delinquencies Show Clear 'Positive Shift,' RBS Says
Bloomberg (06/10/10) Shenn, Jody; Levy, Dan
RBS Securities Inc. reports a slowdown in subprime delinquencies during the second quarter, with an average 2.6 percent of borrowers with subprime loans in 2007-issued bonds who never missed payments becoming delinquent in each of the last three months versus 3.7 percent in February. RBS analysts say the 15 percent seasonally adjusted decline indicates a "positive shift in borrower behavior." Meanwhile, a report from Amherst Securities Group LP shows a drop in new delinquencies on loans in non-agency mortgage bonds to 1.2 percent in May from 2.5 percent in early 2009.
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Bill Gives Home Buyers Extra Time for Tax Credit
Washington Post (06/11/10) P. A14; ElBoghdady, Dina
On June 10, Senate Majority Leader Harry Reid, D-Nev., introduced a proposal that would extend the closing deadline for home buyers eligible for federal tax credits to Sept. 30, which would help lenders work through a backlog of mortgage applications. The National Association of Realtors says upwards of 180,000 home buyers who signed contracts by April 30 would not meet the June 30 closing deadline. The measure could be attached to a Senate bill to extend numerous tax breaks, but the bill's passage remains uncertain.
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Mortgage Rates Drop; 15-Year at New Low
Wall Street Journal (06/11/10) P. C10; Becker, Nathan>
Home-mortgage rates fell this week along with bond yields, according to Freddie Mac. The 30-year fixed-rate mortgage averaged 4.72 percent, down from 4.79 percent a week ago; while rates on 15-year fixed-rate mortgages fell to another record low of 4.17 percent from 4.2 percent. Also, the five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.92 percent, down from 3.94 percent last week. Finally, one-year Treasury-indexed ARMs fell to a new six-year-low of 3.91 percent, compared with 3.95 percent a week ago.
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Senate Holds Conference's Upper Hand
American Banker (06/11/10) P. 1; Kaper, Stacy
The regulatory reform conference committee met for the first time on June 11, and given that the Senate's bill is being used as the base text of the final legislation, observers say it has an advantage. However, the revised bill incorporates the House's language for mortgage underwriting standards, which would force lenders to verify a borrower's repayment ability, ensure refinancing offers a "net tangible benefit" and tasks the new consumer protection regulator with creating anti-steering rules for originators. The revised bill also modifies some of the House's mortgage standards to expand a safe harbor permitting higher interest rates and points and fees caps on certain mortgages and puts the proposed consumer protection agency in charge of setting new mortgage underwriting standards with help from HUD and other agencies.
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Mortgage Fees Could Rise
Boston Globe (06/11/10) P. 9; Zibel, Alan
The House of Representatives has passed a bill that would allow the Federal Housing Administration to raise the monthly premiums it charges home buyers who take out home loans guaranteed by the agency. The FHA's finances have been hit hard by the foreclosure crisis, but the increase in mortgage fees would bring in $5.8 billion in new revenue next year. Although the House approved the measure on a 406-4 vote, there is some uncertainty whether the Senate would support an increase in fees for FHA-backed mortgages.
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